An ancient Japanese poet once said, ‘My barn having burned down, I can now see the moon’.
This farmyard reference recalled the tale of Gerald Ratner’s cash cow, which was razed to the ground by a media fire in 1991. We recently went to a talk held by the riches to rags entrepreneur and came away enlightened, feeling that although Ratner’s ‘barn’ had been burned down to the ground, he was well and truly able to ‘see the moon’ once again.
If you’re not familiar with the story, we’ll set the scene. Ratner was CEO of a company listed on the London Stock Exchange that he had built out of a family business. His stores dominated the UK jewellery market, and in 1990 the company’s market value was around £840 million. With a flashy lifestyle, and what seemed like an air-tight business formula (selling cheap jewellery in great volumes), it seemed he was untouchable. That was, however, until he lost everything in a few short moments.
How it Happened
In 1991, he was asked to speak at a conference at the Institute of Directors, in front of 5,000 prominent business people. Ratner’s famously sold a sherry set for the meagre price of £4.95. When asked how he could afford to do so, Ratner declared: ‘because it’s total crap’. To add insult to injury, he also joked that a shrimp sandwich from M&S cost more than a pair of earrings the brand sold, and that the lunchtime classic would likely last for longer too. The press had a field day. In less than a week, the company’s share price plummeted so drastically that the business lost around £500 million in market value. Ratner tried to control the damage by bringing in a new chairman, but the move backfired. The chairman promptly sacked Ratner.
Ratner became clinically depressed and spent most of the next 5 years on the couch watching ‘Countdown’. It wasn’t until his wife threatened to leave him, that he managed to get out of the house. In his inspiring talk, he explained that exercise saved him. Having discovered cycling, he would ride up to 28 miles a day, and it was this pursuit that gave him his next business idea. He wanted to open a health club in Henley-on-Thames. However, when he first went to the bank with the aim of raising money, he was laughed right out of the door. Refusing to give up, Ratner launched a marketing campaign that encouraged customers to sign up and pay a fee to join his gym. A huge success, the campaign allowed him to return to the bank and win enough funding, and kudos, to launch the business. In 2001, the company was sold for £3.9 million.
And his comeback doesn’t stop there. At the beginning of the millennium he had hopes of starting an online business selling jewellery. This was of course a market he knew incredibly well, and he hoped to name the brand ‘Ratner’s Online’. However, this was forbidden by the old company, which had since been renamed ‘Signet Group’. They explicitly stated that their group owned the rights to the Ratner name in the context of a jewellery business. So, he decided to call it ‘Gerald Online’.
No Mean Feat
Back in the jewellery business, and receiving great accolade as a public speaker, it seems that the phrase ‘doing a Ratner’ (as used by both Gordon Brown and Boris Johnson) may need a little re-thinking. Instead of being synonymous with catastrophic failure, we think it should represent resilience. Losing everything and bouncing back is no mean feat, and the way Ratner was able to overcome this struggle, and make people laugh with his storytelling, shows how humour, lightness and determination can see you through even the darkest of situations. In fact, life can once again be illuminated by that brilliant moon.
Want to read more? Check out Ratner’s book ‘The Rise and Fall… and Rise Again’.
Until next time,
Add then Multiply.